Six leading cement companies forming a 'cartel' under CCI scanner

The Competition Commission of India (CCI) in a preliminary investigation has found six leading cement companies have formed a cartel, this time in the northeastern region.

“In fresh investigations, six large cement manufacturing firms have been found to be forming a cartel," a source close to the development said.

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Other cement players in different geographies could also face scrutiny as the investigation widens.

The development has highlighted the competition watchdog’s focus on sectors that affect consumers directly. After penalising those involved in the auto ancilliaries cartel, the CCI looked at health care. Cement is a sector under constant watch.

The competition watchdog had earlier imposed heavy fines on cement companies and the Cement Manufacturers’ Association (CMA). The Commission had imposed a penalty of more than Rs 60 billion on cement firms in 2012. In 2016, 11 companies and the cement association were penalised Rs 67 billion.

The 2016 order was on the lines of the 2012 order on the same issue, imposing a penalty of 0.5 times of net profits. In these orders, cement manufacturers and their association had been accused of using a common portal to manipulate prices.

After having spotted a cement cartel that had been formed in response to a tender of the Haryana government in 2014, the CCI had imposed a fine of Rs 2.06 billion on seven companies, including Ambuja and UltraTech last year.

Its order stated their anti-competitive conduct had been established by looking at phone calls and SMSes of the cement companies’ executives.

The companies have been directed “to cease and desist" from such activities. This order came on a complaint originally filed by the director, supplies and disposals, of the Haryana government. It was alleged that the cement manufacturers had formed a cartel and quoted higher bids.